An Alignment Model for Collaborative Value Networks

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Logo Cliente. Axia Consulting – the Milestone. SAP. ® ... Understand company strategy. – Compare the business strategy with the current customer value proposition. (competitive strategy, target markets, products, services, channels, brand).
AN ALIGNMENT MODEL FOR COLLABORATIVE VALUE NETWORKS Carlos Bremer Rodrigo Cambiaghi Azevedo Alexandra Pereira Klen

PRO‐VE’09 Conference ‐ Thessaloniki, Greece ‐ October 2009

Axia Consulting – the Milestone

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SAP® Award for Best SCM Research

Ricardo Catto, MBA Partner @ Axia

Carlos Bremer, PhD Partner @ Axia

Philadelphia, December 1999

Axia Consulting – the Evolution

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AXIA in Greek means VALUE 2000 – Marks Axia Consulting’s embryonic stage – Axia  Transformation Methodology is developed following the  award‐winning research of SAP University Alliance

2003 – Axia Consulting starts its activities 2005 – Axia carries out international projects in Europe, China and Argentine 2007 – Axia’s Management Model undergoes advances with implementation in  different complex environments 2008 – Axia expands its office and creates the Center of Innovation in Business  Transformation 2009 – Axia Consulting expands its business to North America

Traditional Approach for Transformation Projects

A

Value Chain Management Transformation

People

Processes

Technology

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B

Traditional Approach for Transformation Projects

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• Software Engineering Perspective • Y2K Problem • Specialization of Consulting Business • Leadership looking for fast and concrete solutions • Functional Mind‐set • …. 6

Traditional Approach for Transformation Projects

A

Value Chain Management Transformation

People

Processes

Technology

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B

Traditional Approach for Transformation Projects

• Traditional processes consider just explicit  mechanisms • Lack of applied references –Functional perspective –Ambiguous definitions and applicability

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Traditional Approach for Transformation Projects

A

Value Chain Management Transformation

People

Processes

Technology

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B

Traditional Approach for Transformation Projects

• • • • •

Communication Motivation Training Team Building ….

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Traditional versus Innovative Transformation Approach

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How to address Value Chain Management Transformations?

2000

...

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2009

...

Value Proposition

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Results

Ensure the generation of significant results for our clients through Value Chain Management innovation

n

A

 C e u l Va

h

e m e g na a M   ain

B

on i t a rm o f s n t Tra

time

Dimensions of a Robust Transformation Approach

A

Value Chain Management Transformation

People

Processes

Technology

Vision

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B

Value Proposition

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Ensure the generation of significant results for our clients through Value Chain Management innovation



Vision: Deploy the business strategy through a value proposition perspective  and align the transformation vision among the leadership – Understand company strategy – Compare the business strategy with the current customer value proposition  (competitive strategy, target markets, products, services, channels, brand) – Analyze competitors value proposition – Benchmark similar business models

Frame

1

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3

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Dimensions of a Robust Transformation Approach

A

Value Chain Management Transformation

People

Processes

Technology

Vision

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B

Integrated Frame

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1 2 3 4 5 6 7 8 9

Dimensions of a Robust Transformation Approach

A

Value Chain Management Transformation

Strategy

People

Processes

Technology

Vision

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B

Value Proposition

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Ensure the generation of significant results for our clients through Value Chain Management innovation



Strategy: Translate the transformation vision into a value delivery model and  related work plan – Definition of Multiple Value Chains • Flexible, Lean, Agile or Replenishment • Relationship model based on selling/buying behaviors

– Value chain network design/adjustments • Analyze network scenarios considering different value chain  propositions, sustainability issues, risk management and costs

– Determine main KPI´s goals (Best in class, advantage, parity) • Align Value proposition with operational model & trade‐offs

– Initiatives Roadmap and investment plans 19

Proposed model: Four Forces or Logics of Dominant Behaviours Logo Cliente Carl Gustav Jung proposed four “psychological function” of human behaviour. Base on Jung’s model, John Gattorna defines four predominant customer  buying behaviours.

I

Developer  D

Integrator ’ ng i l e ‘Fe Strength for cohesion,  cooperation and  relationship

‘In

tu it

ion ’

Strength for  creativity, changes  and flexibility

Strengths Strengths of of Behavior Behavior

t sa en ‘S

Strength for  analysis, systems  and control

n io ’

A

Administrator

Source: Gattorna, J. Living Supply Chain, 2006

Strength for energy,  action and results ‘T ho ug ht ’

• •

Producer   P

Types of Value Chains

Source: Gattorna, J. Living Supply Chain, 2006

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Dimensions of a Robust Transformation Approach

A

Value Chain Management Transformation

Strategy

People

Processes

Technology

Vision

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B

Value Proposition

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Ensure the generation of significant results for our clients through Value Chain Management innovation



Processes: Structuring a set of management processes that are able to  maximize the achievement of company’s strategic goals by continuously align  the existing business trade‐offs – – – – – – –

Strategic Planning Management  Sales & Operations Planning Demand Fulfillment Order Management Execution Flow Management Demand Management Supply Management

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Dimensions of a Robust Transformation Approach

A

Value Chain Management Transformation

Strategy

People

Processes

Technology

Vision

KPI´s

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B

Value Proposition

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Ensure the generation of significant results for our clients through Value Chain Management innovation



Key Performance Indicators: establish a set of performance indicators in  order to monitor the adherence between the value proposed to customers  against the real value delivered.  – Analyze the company performance drivers – Define the company’s Value Chain Scorecard ® • • • •

Flexible Chain Replenishment Chain Lean Chain Agile Chain

– Implement a process to support the  management of the Value Chain Scorecard®

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Dimensions of a Robust Transformation Approach

A

Value Chain Management Transformation

Organization

People

Strategy

Processes

Technology

Vision

KPI´s

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B

Value Proposition

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Ensure the generation of significant results for our clients through Value Chain Management innovation



Organization:  aims to address a new organizational model able to sustain  the transformation vision – Understanding the organizational culture – Communicating transformation’s decisions – Following up individual/organizational  evolution – Defining R&R – Setting Org. Clusters

Dimensions of a Robust Transformation Approach

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Results

Alignment between value proposition and value delivery Management process orientation

B

Multiple Value Chains

on i t a rm o f s an r T   t n

A

e People, values, beliefs m e g a n a M n  i a Organizational behavior h C   e Valu Required technology

Value Chain Scorecard

time

Axia Transformation Methodology 

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Ensure the generation of significant results for our clients through Value Chain Management innovation

Alignment Model

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Conclusion

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An important challenge faced by companies in gaining competitive advantage  is the alignment between their value proposal to the market with the actual  value delivered. 



For Collaborative Value Networks to succeed it is necessary to align the  multiple supply chains that co‐exist in a single enterprise.



This presentation discussed the practical application of a model that aligns  multiple value  chains based on the 7 Dimensions Transformation  Methodology. 

Dimension Vision – Strategic Differentiation Product Leadership

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Customer Intimacy

Operational Efficiency

Value Chain Scorecard (VCSC) Product Customer Leadership Intimacy SUSTAINABLE VALUE GENERATION

DCOR

H2O Consumption 

Perfect Product  Design Design Chain  Cycle Time Product Design  Change Cycle  Time Total Design  Chain Cost

‘’

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Carbon  Footprint

Energy Consumption

Operational Efficiency

Cash‐to‐Cash Return on Working Capital

CCOR

Return on SC Fixed Assets

Share of wallet Order Fulfillment Cycle  Time Downside Supply Chain  Adaptability

Supply Chain Management  Costs

Perfect Order

Cost of Goods Sold

SCOR

Design Chain FTE  per Product Design

Relationship  time Customer  Loyalty Index 

PPM

S&OP Accuracy Sales Plan  Accuracy Sales Quote  Adherence

Purchase Order  Modification Average

Technology

Manufacturing  Plan Accuracy Production Program.  Adherence

Production Order  Modification Average

Raw Material Plan  Accuracy RM Program.  Adherence Distribution Order  Modification Average

People 35

Distribution Plan  Accuracy Distribution Program.  Adherence Supplier  Perfect Order

Organization

Multiple Value Chains

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John Gattorna, PhD

“The dynamic alignment concept provides to the  demand and supply management processes with  a structured way of linking customer and  suppliers behaviors to the operational side of an  enterprise. It’s an outside‐in management  approach”. 

Dimension Process – Axia Reference Model® Develop

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Serve

LONG TERM PLANNING (STRATEGIC PLANNING)

SUPPLY MANAGEMENT

Raw Material

INTEGRATED PLANNING (S&OP)

FULLFILLMENT MANAGEMENT

ORDER MANAGEMENT

EXECUTION FLOW MANAGEMENT

ENABLING PROCESS

Finished Goods

Balanced ScoreCard (BSC)

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Value Proposition Customer

Balanced Scorecard 9One-size-fits-all Internal Process Value Delivery

Sale

Planning

Supply

Deliver

9 Do not manage trade-offs

Produce

Learning and Growth

Organization

People

Tecnologia

Value Chain Scorecard Application

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Sustainable Value Generation Profit Value Profit Value

Planet Value

Inventory Turns

Cycle Time Cycle Time

Overall Assets  Overall Assets  Efectiveness (OAE) Efectiveness (OAE)

Supply Chain  Supply Chain  Flexibility Flexibility Total Costs Total Costs

Stock Out  Stock Out Stock Out 

Cost of Goods Sold Cost of Goods Sold Cost of Goods Sold Cost of Goods Sold

Supply Chain  Management Cost 

On Time In Full

Tactical

Quality of Goods Quality of Goods

Planning Accuracy Planning Accuracy

Operational Fully Flexible Agile Lean Continuous Replenishment

Best In Class Schedule Adherence Schedule Adherence

Process and Variabilities 39

Advantage Parity

Customer Service

Cost to Server

People Value

Organizational Behavior

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Organization

Human Resource  Policies and Practices

Organizational  Values

Work Desing and  Organizational Structure

Basic Underlying  Assumptions

Leadership and  Trust

Roles and  Responsabilities

Organizational Results Aligning the organizational  elements to the business  vision.

Organizational  Sistems Group Decision  Making Group Results

Stress and  Changes

Work Teams

Group Structure 

Conflict

Communication

Politic Model

Creating positive  interactions between the  groups. The relationship  should be aligned to the  organizational goals.

People

Group Level

Individual Learning

Abilities and  Knowledges

Individual Values  and Beliefs

Individual Decision  Making

Personality and  Emotions

Attitudes

Individual Result

Perception Interpretation

Biographical  Characteristics

Motivation

Individual Level

Adapted from Stephen P. Robbins (2005). Organizational Behavior. Pearson Prentice Hall, 11ª Edition.

Developing and increasing  the technical and  behaviorial competences  for the positive  envolvement of the  individuals in the groups.